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BayernLB and Austria delay legal fight over Hypo deal
December 23, 2013 / 3:16 PM / 4 years ago

BayernLB and Austria delay legal fight over Hypo deal

VIENNA, Dec 23 (Reuters) - Austria and German bank BayernLB have put off again legal action over the 2009 purchase of lender Hypo Alpe Adria, a deal which Vienna has threatened to try to have unwound in court, the finance ministry said on Monday.

Austria had to take over Hypo to avoid a collapse that would have sent shockwaves through central and eastern Europe, but has for months been mulling a lawsuit, alleging that the Bavarian bank misled it over the severity of Hypo’s problems.

BayernLB, majority owned by the German state of Bavaria, denies this.

The Austrian state bought Klagenfurt-based Hypo, operating mainly in the Balkans, for 1 euro ($1.37) a year after Lehman Brothers folded, triggering the global financial crisis. It has cost taxpayers 4.8 billion euros in aid to keep it afloat so far.

The finance ministry in Vienna said former Hypo owner BayernLB had agreed to extend the statute of limitations - or time limit - for filing such a suit until the end of 2014. A year ago it had put the deadline back until the end of 2013.

“BayernLB has waived the statute of limitations so that we have all options available and can review further steps calmly. Our goal remains the best solution in the interests of taxpayers and the financial centre (Austria),” a ministry spokeswoman said by text message.

In Munich, a BayernLB spokesman confirmed the information.

Loss-making Hypo is trying to shrink back to health, but its chronic need for aid is hurting Austria’s efforts to cut state debt and deficits.

BayernLB had bought Hypo from the Austrian province of Carinthia and private investors in 2007 for 1.7 billion euros - an acquisition it later claimed it was duped into making.

The German bank ended up taking a 3.7 billion euro hit on the deal and is still pursuing legal action over the deal. ($1 = 0.7315 euros) (Reporting by Michael Shields in Vienna and Joern Poltz in Munich; Editing by Louise Ireland)

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